Where Does the Fraud Go Post EMV?

Luke GrantLuke Grant, Product Manager, Payment

As our industry continues to roll out EMV chip card technology, fraud at the c-store will continue to decline due to befits of EMV in combating card-present counterfeit fraud.  As this happens, fraudsters will likely shift their focus to other low hanging fruit, such as online or e-commerce fraud where it’s more difficult to verify the identity of the person making the transaction.  This is generally what other markets around the world have experienced after fully adopting EMV.  Although e-commerce doesn’t play a big role in today’s c-store, I thought it might be helpful to touch briefly on how the payments industry is looking to address a potential rise in e-commerce or card-not-present (CNP) fraud.

According to the latest statistics from the U.S. Commerce Department, e-commerce sales topped $300 Billion in 2014 and are continuing to account for a larger percentage of overall retail sales.  As e-commerce continues to grow, we would expect to see a corresponding rise in e-commerce fraud.  However, as we saw in other countries, the implementation of EMV can cause e-commerce fraud to spike even more due to the door closing on card-present fraud.  In the Canada, for example, in the years after EMV was implemented (2008-2013) fraud related to counterfeit and lost/stolen cards decreased by 58%, whereas CNP fraud rose by 133% according to an Aite report.

Quite a few technologies exist to aid in authentication for CNP transactions, such as one-time use passwords, secret questions, device authentication tools and even biometrics like fingerprints and facial recognition.  These technologies vary in terms of their effectiveness, their impact on the consumer’s experience, and the cost to integrate them into the payment process, which can impact adoption by merchants and processors.  In April 2015 the EMV Migration Forum published a whitepaper that covered current best practices for securing CNP transactions.  In addition to the authentication methods mentioned above, the whitepaper describes three additional approaches to curbing CNP fraud.

  • Fraud Reduction Tools – When a transaction is performed, all of the data associated with that transaction (consumer, payment method, products ordered, etc.) can be analyzed to evaluate the risk that the transaction is fraudulent.  A merchant or payment processor can use this risk scoring to decide whether to approve a transaction.
  • 3-D Secure– This is a standard communication protocol supported by the card brands that merchants and issuers can integrate to for better cardholder authentication.  It primarily incorporates the use of passwords that the consumer must provide to proceed with a transaction.
  • Tokenization – This involves replacing the card holders account number with a different number that has no value for fraudsters.  The tokens can either come from an acquirer after a transaction is completed and stored by the merchant, or presented with the transaction as it is with Apple Pay.

Overall, most stakeholders in the payment industry agree that there is no “silver bullet” for eliminating fraud, but instead merchants and processors need to deploy a variety of these tools to increase payment security.  For retail petroleum operators, the near-term focus should continue to be on securing card-present transactions through the rollout of EMV, although by learning about these additional tools you can begin preparing for the future as more and more transactions are completed without a physical card.

Additional Information:

For additional resources on the EMV migration to the US and its impact on our industry, please see:

  1. Gilbarco’s EMV informational web-page
  2. Previous Gilbarco blog posts on EMV:
    1. September 2011 – VISA announces EMV roadmap to the United States
    2. February 2012 – Another “Chip” Falls – MasterCard Follows Visa’s EMV Lead
    3. December 2012 – EMV Migration to the U.S. – What Convenience Store Retailers Need to Know
    4. March 2014 – Creating an ROI to the EMV Migration
    5. May 2014 – EMV – The Horse is Out of the Barn
    6. August 2014 – Broad Retail Moving to EMV in the U.S.
    7. September 2014 – Recent Data Breaches Highlight the Need for EMV
    8. November 2014 – Fraud at the Pump – How EMV Can Eliminate “Pump and Dump” Schemes
    9. January 2015 – EMV Made Easy – How the Consumer Experience Will Change
    10. March 2015 – Have My Chip – Now Where’s My PIN?
    11. April 2015 – EMV Liability Shift Dates Standing Firm
    12. May 2015 – Credit Card Fraud and EMV in the News
  3. Product Opportunities to create an ROI from the EMV Migration
  4. EMV Migration Forum – Knowledge Center

Driving Results with a Digital Store Experience

Jason BertinettiJason Bertinetti, Marketing Manager

As I reflect on Gilbarco’s recent Retail Technology Conference, I find myself eager to highlight a number of specific cases where retailers are using technology to drive real business results. Many of this year’s innovation conversations focused on delivering a differentiated brand experience through custom mobile applications and/or a tailored loyalty rewards experience. The range of applications being used to carry out consumer experiences is vast and it will be exciting to see how these trends affect our industry landscape in future periods.

While new digital technologies have the potential to redefine the way a consumer shops in a c-store, I had the chance to speak with an innovative retailer named Boyett Petroleum headquartered in Southern California who shared an instance of coupling two widely available technologies to achieve strong results.

What was the motive?  Company-wide charity initiative for a 2 month campaign to raise money for the Make Dreams Real Endowment Fund. The C-store side of the business branded “Cruisers,” drove a subset campaign entitled the “Send a Kid to Camp” program.

What was the idea?  Use Applause in the dispensers to drive awareness of the program and intertwine a consumer contribution mechanism at the forecourt.

How to they find a solution? Boyett’s Maintenance Supervisor Rick Jewell went to YouTube for ideas and found a CRIND Merchandising tutorial video done by Scott Oakes in 2012. He applied the knowledge from the video to their POS system. In the words of Rick, “It literally took me less than 5 minutes to set-up.” The team worked in parallel with the marketing department to put together a 15 second Applause clip explaining the benefits of the charity program and educating consumers how they can make a donation through a simple selection at the Pump.

What was the result?  Raised in excess of $15,000 through Pump purchases during the 2 month campaign.

The highlight of this initiative is not only about the results but also the story of an idea that was made real by utilizing widely available informative videos on the web. Boyett is taking a simple approach to creating a connected digital store experience with their customers. In addition to outdoor consumer messaging via Applause, Boyett uses complementary technology at the counter-top with Impulse to continue the conversation and drive further consumer action.

Congrats to the Boyett team for their efforts and to read more about the company-wide initiatives, check out above article published in CSP late last week.

Biofuels Receiving Support

Paul KaperPaul Kaper, Product Manager, Dispensers

The USDA in its expanding support of American-grown renewable energy, announced the Biofuels Infrastructure Partnership (BIP) on May 29th. This program is designed to double the number of renewable fuel blender pumps that supply higher ethanol blends, like E15 and E85, and increase ethanol consumption. Proponents of the BIP see this as a considerable opportunity to strengthen the positioning of renewable fuels through availability and reach and to give consumers more choices at the pump.

On June 16, 2015 the USDA will issue a Notice of Funds Available for this new program. Administered by the USDA’s Commodity Credit Corporation, up to $100 million in grants will be available to all 50 states, Puerto Rico and Washington DC. States that offer a greater than one-to-one ratio in funding will receive higher consideration for grant funds and States may work with private entities to enhance their offer.

A typical gas pump can deliver fuel that contains a maximum 10% ethanol, which limits the amount of renewable energy most consumers can purchase at the pump, despite the fact that our farmers now produce record amounts of renewable biofuels. The USDA expects this program will create innovative ways to distribute higher blends of renewable fuel.

The United States exported more than $2 billion dollars of ethanol last year, making the United States the world’s largest exporter of ethanol. Additionally, the United States has become a market leader in the export of high-quality distiller’s dried grains (DDG), a byproduct of ethanol production used as a high-protein feed for livestock and poultry. This new USDA partnership will help support the installation of fuel pumps capable of supplying higher blends of renewable fuel by partnering with states to fund innovative, public-private partnerships to test more comprehensive approaches to marketing such blends. To date, more than $3.3 million has been spent on blending equipment in support of ethanol fuels.

Gilbarco Veeder-Root is the worldwide technology leader for retail and commercial fueling operations. We offer the broadest range of integrated solutions from the forecourt to the convenience store and across the widest range of fuel types.

Additional Resources:

In the News:

Credit Card Fraud and EMV in the News

Luke Grant

Luke Grant, Product Manager, Payment

As the issue with credit card fraud in the U.S. increases, we continue see more coverage in mainstream media around the need for greater payment security. On May 27th, The Today Show on NBC released the latest in their series titled “Hackers of America”. The report focused on how easy it is for hackers to steal the cardholder’s information from a magnetic stripe and use it to create fraudulent mag-stripe cards. Tom Costello noted in his interview with James Lyne, Head of Security Research at Sophos, that EMV is “the next step” towards solving this problem.

 

As awareness of this problem grows, we’ve seen various stakeholders in the payments industry continue to support a rapid rollout of EMV in the U.S. In my last C-Store Advisor Blog, EMV Liability Shift Dates Standing Firm, I commented on recent statements made by the major card associations about their commitment to hold the current liability shift dates in October 2015 (in-store POS) and October 2017 (Automated Fuel Dispensers) in order to incentivize the market to adopt EMV technology.

We’ve also seen new evidence that financial institutions are accelerating the deployment of chip-enabled credit and debit cards to the U.S. market. A report released on May 4th from The Payment Security Task Force indicated that 63% of total cards in the U.S. would be chip-enabled by the end of 2015. This projection has increased from 54% of total cards in a similar poll of card issuers conducted in August of 2014. This equates to approximately 150 million more EMV cards in the market this year than previously predicted.

On the merchant side, predictions continue to show that approximately 47% of POS terminals will be EMV ready by the end of 2015. Chris McWilton, MasterCard’s president of North America markets, stated in the PST press release, “These numbers show real movement from plans to action as issuers, merchants and others in the payments system engage collaboratively to bring chip cards to the U.S.”

The full benefits of EMV in the U.S. will ultimately be realized when chip cards and terminals become ubiquitous. Until that point is reached, we’ll continue to see fraudsters shift their focus to the path of least resistance, which could have significant implications for the petroleum industry as we have two additional years to roll out EMV at the pump. The faster we can get our industry upgraded, the faster we can close the door on fraudulent credit cards and card skimming.

Additional Information:
For additional resources on the EMV migration to the US and its impact on our industry, please see:

  1. Gilbarco’s EMV informational web-page
  2. Previous Gilbarco blog posts on EMV:
    1. September 2011 – VISA announces EMV roadmap to the United States
    2. February 2012 – Another “Chip” Falls – MasterCard Follows Visa’s EMV Lead
    3. December 2012 – EMV Migration to the U.S. – What Convenience Store Retailers Need to Know
    4. March 2014 – Creating an ROI to the EMV Migration
    5. May 2014 – EMV – The Horse is Out of the Barn
    6. August 2014 – Broad Retail Moving to EMV in the U.S.
    7. September 2014 – Recent Data Breaches Highlight the Need for EMV
    8. November 2014 – Fraud at the Pump – How EMV Can Eliminate “Pump and Dump” Schemes
    9. January 2015 – EMV Made Easy – How the Consumer Experience Will Change
    10. March 2015 – Have My Chip – Now Where’s My PIN?
    11. April 2015 – EMV Liability Shift Dates Standing Firm
  3. Product Opportunities to create an ROI from the EMV Migration
  4. EMV Migration Forum – Knowledge Center

EMV Liability Shift Dates Standing Firm

Product Manager, Payment

We’re now less than 6 months away from the October liability shift that is driving merchants and card issuers to deploy EMV-enabled point-of-sale systems and EMV chip cards respectively.  A big question on everyone’s mind as this date draws closer is whether the major card associations will maintain the current liability shift dates, or delay them to provide more time to get new cards and terminals into the market.  What we’ve continued to see is a strong commitment from the card associations to hold their dates in order to continue incentivizing a rapid adoption of EMV to help stem the growing problem of fraud in the U.S.

On April 21st in the Discover Financial Q1 Earnings Report call, Chairman and CEO David Nelms fielded a question about delays in the October 2015 liability shift date.  Nelms responded, “I think that it’s important that we all try to hit the October date.  This has been a long time in the works; it’s been a date that was set quite some time ago.  And as an industry, we know we need to do something to better control security and fraud losses.”  He continued, “And I think it’s in the merchants’ best interests to try to get there just — if anything, more than it is for the issuers, when you look at some of the breaches that have happened.”  This is certainly an important point for merchants, because as EMV becomes ubiquitous, the motivation for fraudsters to attempt network breaches goes down as their ability to make counterfeit cards with the stolen data is eliminated.

In a previous C-Store Advisor Blog, “EMV – The Horse is Out of the Barn”, Parker Burke referenced similar statements from executives at both MasterCard and Visa.  The overall sentiment is that fraudsters are not slowing down their efforts to capitalize on the last major market to adopt EMV technology, and that any delay in the U.S. EMV migration would only worsen the problem of counterfeit fraud.

Visa is further supporting a rapid adoption of EMV by taking their message on the road in the U.S. to help small businesses and consumers understand EMV and the benefits of chip technology.  Visa kicked off its 20-city Small Business Chip Education Tour in Austin, TX in March.  Kim Lawrence, senior vice president of Corporate Initiatives at Visa, said in the news release, “Chip education and adoption is critical, because as of October 1, 2015, liability for counterfeit fraud on Visa chip card accounts will shift from the chip card issuer to business owners who have not upgraded to chip-activated terminals.”

As we continue to see a reaffirmation of the established liability shift dates, it becomes increasingly important for petroleum retailers who have not started their EMV upgrades to begin making plans today, both for their in-store POS as well as at their dispensers.

Additional Information:

For additional resources on the EMV migration to the US and its impact on our industry, please see:

  1. Gilbarco’s EMV informational web-page
  2. Previous Gilbarco blog posts on EMV:
    1. September 2011 – VISA announces EMV roadmap to the United States
    2. February 2012 – Another “Chip” Falls – MasterCard Follows Visa’s EMV Lead
    3. December 2012 – EMV Migration to the United States – What Convenience Store Retailers Need to Know
    4. March 2014 – Creating an ROI to the EMV Migration
    5. May 2014 – EMV – The Horse is Out of the Barn
    6. August 2014 – Broad Retail Moving to EMV in the U.S.
    7. September 2014 – Recent Data Breaches Highlight the Need for EMV
    8. November 2014 – Fraud at the Pump – How EMV Can Eliminate “Pump and Dump” Schemes
    9. January 2015 – EMV Made Easy – How the Consumer Experience Will Change
    10. March 2015 – Have My Chip – Now Where’s My PIN?
  3. Product Opportunities to create an ROI from the EMV Migration
  4. EMV Migration Forum – Knowledge Center